MCX gold prices in India have extended their rally for a fifth consecutive week, with August gains reaching double digits. The persistent decline in the U.S. dollar has made bullion cheaper for holders of other currencies, boosting demand for the metal.
MCX gold concluded the week with gains of nearly ₹8,000 per 10 grams, settling at ₹1,62,438, marking its highest level in over three months. This rally pushed its August gains to 13.3%, or ₹19,000, while its year-to-date return increased to 20%. Renewed demand has helped gold recover much of its earlier losses, narrowing the gap from its record high of ₹1,80,779 reached in January. At current levels, gold is trading about 10% below its peak, compared to a gap of around 21% at the start of the month.
The U.S. dollar fell to a three-month low on Wednesday amid concerns over the U.S. Treasury's plan to expand buybacks of longer-dated government debt, which could pressure the currency further. Treasury Secretary Scott Bessent indicated that the government might increase its repurchases of Treasuries, following a surprise announcement to double the size of its buybacks of longer-dated debt to control bond yields. Long-dated Treasury yields surged this week, with the 30-year yield reaching its highest level since 2007, driven by concerns over fiscal outlook, heavy debt issuance, geopolitical risks, and uncertainty over Federal Reserve policy.
“The commodity outlook remains constructive for precious metals but highly volatile for energy.”
Ponmudi R, CEO of Enrich Money
Ponmudi R, CEO of Enrich Money, noted that the commodity outlook remains constructive for precious metals but highly volatile for energy. Gold and silver could benefit from reduced expectations of immediate Federal Reserve tightening, although elevated Treasury yields and higher oil prices remain key risks. He added that Fed Chair Kevin Warsh's upcoming Jackson Hole address will be pivotal, as a dovish or neutral tone could support bullion, while a hawkish surprise could strengthen the U.S. dollar, pressuring gold and silver.
On the technical front, Ponmudi highlighted that the weekly RSI has risen to 65.03, while the daily RSI at 76.10 is in overbought territory, suggesting an extended move in the near term. Immediate resistance is in the ₹1,62,500–₹1,63,000 zone, with a sustained close above ₹1,63,000 confirming a continuation toward ₹1,65,000. Immediate support lies in the ₹1,58,500–₹1,59,000 zone, with the next support at ₹1,55,500–₹1,56,000.
Background
The recent rally in gold prices comes amid a backdrop of global economic uncertainties and shifting monetary policies. Historically, gold has been viewed as a safe-haven asset, attracting investors during times of economic instability and currency fluctuations.
Looking ahead, investors will closely watch the Federal Reserve's policy signals and geopolitical developments, which could influence gold's trajectory. The upcoming Jackson Hole symposium and Fed Chair Warsh's speech will be critical in shaping market expectations and determining the future direction of gold prices.
